Satrix INDI: A Proudly South African ETF

Exporting Local

Big South African brands have not only pioneered access to affordable goods and services, but they have also uplifted communities with economic opportunities and believe in the power of backing local by exporting globally. With over 500 stores, the Shoprite Group reached a record-breaking R200 billion in sales in its July 2023 results.  The MTN Group has 290 million subscribers across Africa and is a top 10 network operator in the world. South Africans love their DStv, with 40% of the 14.2 million Multichoice subscribers being locals, and the remaining 60% from the rest of Africa. These are all South African brands and while it’s easy to walk into Clicks to fill up your basket, or buy airtime from Vodacom, or even buy fashionable and affordable clothes from Mr Price, as a South African you can just as easily be an investor in these household brands - and you can do this by investing in the Satrix INDI ETF (“the Fund”).

What is in the ETF?

The Fund tracks the FTSE/JSE Capped Industrial 25 Index, which has the largest 25 JSE listed companies ranked by market capitalisation and which are classified as SA Industrials. The Fund is rebalanced every quarter, it caps its stock weights at 30%, distributes its income quarterly as well and is available at a TER of 0.44%. The ETF is one of the oldest ETF-listings on the JSE, as it was launched back in February 2002. Classified as a local equity fund, it has an aggressive risk profile – meaning you may experience short-term volatility in your investment portfolio. However, it is also expected to have higher returns over the long term.

The largest holding in the Fund is Naspers, South Africa’s internet, technology and multimedia giant. Tech stocks make up 30% of the Fund. There are essentially two tech stocks in the Fund – Naspers and Prosus. The next biggest holding in the fund is the MTN Group at 9% of the Fund, followed by Prosus, British American Tobacco and Richemont. South African Retails make up 9% of the Fund, with stocks like Woolworths, Pepkor, Mr Price, The Foschini Group and Truworths forming part of the index. The lowest sector exposure in the Fund is Healthcare at 5% which comes from Aspen, Life Healthcare and South Africa’s largest private hospital and emergency medical service network – Netcare.

Why this ETF?

Diversification can provide a level of insulation against economic downturns as different industries may perform differently under varying economic conditions. This ETF provides investors with exposure to Grocery Stores, Telecommunications, Goods and Services as well as Beverages sectors. These can provide a very different risk profile when compared to the Mining and Financial sectors and can provide good defensive exposure in times of economic downturns.

Though many of the companies in the index are South African companies, some of them generate a significant amount of their revenues offshore. Stocks like Anheuser-Busch, Mondi and Bidcorp derive over 90% of their revenues offshore – this then provides investors with a chance to get exposure in global markets, potentially offering a degree of protection against regional economic headwinds.

The Retail and Grocery sectors can provide hedging against inflation as some of these companies are able to pass on increased costs to customers, while others provide goods and services that are integral to the functioning of modern economies.

Overall Investment Strategy

The performance of any sector can be affected by a wide range of factors, including economic conditions, geopolitical events, regulatory changes, and company-specific issues. Therefore, it's crucial to conduct thorough research and to consider your risk tolerance before making investment decisions.

Disclosure

Satrix Investments (Pty) Ltd is an approved FSP in terms of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision.

While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSP, its shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information. 

Disclaimer